Since the 1980s, New Zealand has had a relatively free and open economy. Abolishing most forms of protectionism has benefited consumers and made the economy more resilient. However, remnants of the old edifice remain, including the trade remedies regime, commonly known as anti-dumping.

Trade remedies take three forms: 1) anti-dumping measures that stop goods from being sold for less in New Zealand than in their home markets; 2) countervailing duties that offset subsidies by foreign governments; and 3) safeguard measures that impose duties in response to sudden import surges.

The rationale for these measures is to level the playing field and give domestic firms time to adapt when faced with an influx of imports or subsidised competitors. The rationale is understandable – competing with highly subsidised competitors or foreign state-owned firms dumping products in another country does not seem fair.

However, these measures can come at considerable cost. Businesses can be incentivised to lobby for government protection when foreign threats arise instead of improving productivity and quality to stave off competition. This can make recipient industries less resilient in the long run.
Consumers also lose out on two fronts. First, they forgo the benefit of lower prices. Second, they have to fund bureaucrats to administer the remedies regime.

The good news is that the New Zealand government seldom uses trade remedies. The last safeguard measure, on men’s and boys’ underwear, expired in 1993, while the last investigation, into abrasive disks, was in 1995.

Countervailing duties see similar levels of use. The last full investigation, into canned peaches from the European Union, was in 1998. The resulting duties expired only in 2009.

Anti-dumping measures have been somewhat more heavily used – 12 are currently in place – but are still small in scale. As a result, New Zealanders are paying more for preserved and canned peaches (a popular target), wire nails, galvanised wire, plasterboard, bound stationery, diaries, reinforced steel bars and coils, and hog bristle paintbrushes. The paintbrush measures have been in force since 1988!

Parliament is currently debating the Trade (Safeguard Measures) Bill, which updates but perseveres with the safeguard measures.

Overall, it is time to scrap the regime altogether. Isn’t it enough that we have been paying extra for artificially expensive paintbrushes for the last 24 years?